Langley Holdings plc Annual Report & Accounts 2012 · Chairman’s Review YEAR ENDED 31 DECEMBER 2012 In the year to 31 December 2012 the Group recorded revenues of €527.1 million

Langley Holdings plcAnnual Report & Accounts 2012

langleyholdings.com

To provide world-class engineering, building mutually beneficial long-term relationships.

Mission:

1

ContentsSection 1

Company Overview

Group Overview .............................................................................. 2

Piller Division .................................................................................. 4

Claudius Peters Division ................................................................. 6

ARO Division .................................................................................. 8

Other Businesses ......................................................................... 10

Global Locations ........................................................................... 12

Section 2

IFRS Annual Report and Accounts 2012

Company Information ................................................................... 15

Key Highlights .............................................................................. 16

Chairman’s Review ....................................................................... 17

Geographical Distribution .............................................................. 22

Directors’ Report .......................................................................... 23

Independent Auditor’s Report to the Member ............................... 26

Consolidated Income Statement ................................................... 28

Consolidated Statement of Comprehensive Income...................... 29

Consolidated Statement of Financial Position ............................... 30

Consolidated Statement of Changes in Equity .............................. 31

Company Statement of Financial Position ..................................... 32

Company Statement of Changes in Equity .................................... 33

Consolidated Statement of Cash Flows ........................................ 34

Company Statement of Cash Flows.............................................. 35

Notes to the Accounts .................................................................. 36

2

The Langley Group is a global, multi-disciplined engineering organisation

whose capital equipment technologies form the core of many industrial

and commercial processes around the world.

Cutting-edge technology and a systems-based approach continue to

ensure that the Group’s businesses are either outright market leaders or

key niche players in their particular fields.

Established in 1975 by current Chairman and CEO Mr Tony Langley, the

Group remains financially independent and still under the ownership of its

founding family.

GroupOverview

GROUP OVERVIEW 2012GROUP OVERVIEW 2012

3

True to its original vision, the Group takes pride in operating a highly

transparent business, making annual and interim reports readily available

to all of its trading partners and employees as well as respecting their right

to know who is behind the companies with which they are engaged.

Langley Holdings comprises 4 divisions, based principally in Germany,

France and the UK but also with a substantial presence in the United

States. These divisions are supported by an international network of

subsidiaries in The Americas, Europe, The Far East and Australasia.

In 2012 the Group employed 2,264 people worldwide.

In 2012 the Langley sponsored Gladiator competed in premier grand-prix yacht

racing circuit, the TP52 Super Series. Inset: Tony Langley receives 3rd place

trophy in the Copa Del Rey in Palma de Mallorca from Prince Philippe of Spain.

4

Piller Power Systems is Europe’s leading producer of uninterruptable

power supply (UPS) and backup systems for high-end data centres.

The company was founded in 1909 by Anton Piller and remained in the

ownership of the Piller family until 1993, when it was acquired by German

utility RWE AG. It became part of the Langley Group in 2004.

With modern manufacturing facilities at Osterode and state-of-the-art

testing facilities at Bilshausen, Piller is now universally acknowledged as

the leader in the field of high-end rotary power protection. Piller systems

Piller Division


5

support the global banking and finance community,

broadcasters, telecommunications networks, healthcare

as well as other sectors.

Piller also manufactures ground power systems for civil

and military airports and on-board electrical systems

for surface and submarine naval military applications.

Piller – Nothing protects quite like Piller

Location: Germany

Activity:

Power protection systems

Airport ground power systems

Naval military systems

Revenue 2012: €196.6m

Revenue 2011: €189.8m

Employees: 764

piller.com

Frankfurt Financial District where Piller uninterruptible power protection systems (UPS)

protect 90% of institutions. Photo: Frank Hebeisen.

6

For over a century, Claudius Peters has been producing innovative

materials handling and processing systems for the global cement

and gypsum industries, as well as coal pulverising and injection

systems for the world’s steel industry.

The company’s aerospace division manufactures aircraft ‘stringers’

(longitudinal supports) which are to be found in every Airbus aircraft

currently in service anywhere in the world.

ClaudiusPeters Division


7

Claudius Peters serves its global markets via a network

of overseas subsidiaries. The division’s vigorous research,

development and test programme at nearby Buxtehude

has helped ensure it remains the leader in its field.

Claudius Peters was a division of the UK’s Babcock

International plc until it was acquired by Langley in 2001.

Claudius Peters – We know how

claudiuspeters.com

Location: Germany

Activity:

Process plant equipment

Aerospace components

Revenue 2012: €139.6m

Revenue 2011: €135.4m

Employees: 540

Claudius Peters stockyard system, just one of the ‘techniks’ supplied to a turnkey cement plant in Peru.

8

The ARO Welding Technologies Group provides the automotive

manufacturing industry with advanced robotic, manual and stationery

welding technology and is widely regarded as the world leader in

resistance welding technology.

ARO was founded by M. Albert Rolland in 1949 to produce welding machines

for the auto body repair market. The company became part of the German

MDAX engineering group IWKA AG and then part of the Langley Group in

December 2006.

ARO Division

GROUP OVERVIEW 2012

9

Headquartered near Le Mans, France, today, ARO

produces state-of-the-art welding equipment in the US

and China, serving its global automotive clients via a

network of subsidiaries in Belgium, Germany, Mexico,

Spain, Sweden, Slovakia and the UK.

ARO – La qualité sans compromis

arotechnologies.com

Location: France

Activity:

Automotive welding technology

Revenue 2012: €136.2m

Revenue 2011: €109.7m

Employees: 498

ARO widely regarded as the world leader in resistance welding technology.

Other businesses within The Langley Group (operating at various

locations in the US and the UK) include:

The Clarke Chapman Group: Acquired by Langley from Rolls Royce plc

in December 2000, Clarke Chapman produces specialised cranes for the

nuclear, military and other sectors. The Clarke Chapman Group operates

principally from the UK cities of Newcastle, Leeds, Wolverhampton and Bristol.

Bradman Lake Group: A part of the Langley Group since October 2007,

Bradman Lake Group produces integrated cartoning, wrapping and end-

of-line packaging systems for the food industry. Bradman Lake clients

include some of the world’s leading food companies. The group operates

from East Anglia and Bristol in the UK and Rock Hill, South Carolina in the US.

OtherBusinesses

10 GROUP OVERVIEW 2012

CLARKE CHAPMAN GROUPBRADMAN LAKE GROUPJNDPROTRANPEIREADEROAKDALE HOMES

Smaller units within the Other Businesses division:

• JND: specialising in rotary thermal technologies

• Protran: a fabricator of liquefied compressed gas road

transport vehicles

• PEI: a builder of pressure vessels and heat exchangers

• Reader: a blender of cement grouts and grout machinery

• Oakdale Homes: a regional UK house builder

All of these business units have their own websites

which can be accessed through the main portal:

www.langleyholdings.com

11

Location: UK & USA

Activity:

Diverse capital equipment

Construction

Revenue 2012: €54.7m

Revenue 2011: €59.8m

Employees: 462

High integrity mechanical handling equipment at Torness Nuclear Plant, Scotland, UK

supplied by Clarke Chapman’s Wellman Booth division.

CLARKE CHAPMAN GROUPBRADMAN LAKE GROUPJNDPROTRANPEIREADEROAKDALE HOMES

ASIA PACIFIC SINGAPORE I AUSTRALIA SYDNEY I BELGIUM

BRUSSELS I BRAZIL SAO PAULO I CHINA BEIJING, HONG KONG,

WUHAN I FRANCE LE MANS, MULHOUSE, PARIS I GERMANY

HAMBURG, HANOVER, AUGSBURG I INDIA MUMBAI I ITALY BERGAMO,

MILAN I MEXICO PUEBLA I ROMANIA SIBIU I RUSSIA MOSCOW I

SLOVAKIA BRATISLAVA I SPAIN BARCELONA, MADRID I SWEDEN

FJÄRÅS I USA ROCK HILL (SOUTH CAROLINA), DALLAS, NEW YORK,

DETROIT I UNITED KINGDOM VARIOUS LOCATIONS

Global Locations

12 GROUP OVERVIEW 2012

13

• Principal office locations

• Manufacturing plants

Dallas, USA

New York, USA

Detroit, USA

Le Mans, France

Hamburg, Germany

Mulhouse, France

Hanover, Germany

Retford, UK

14

IFRS Annual Report and Accounts 2012

15

LANGLEY HOLDINGS plc

IFRS ANNUAL REPORT & ACCOUNTS 2012

Company InformationYEAR ENDED 31 DECEMBER 2012

DIRECTORS: A J Langley – Chairman

J J Langley – Non-Executive

B A Watson

SECRETARY: B A Watson

REGISTERED OFFICE: Enterprise Way

Retford

Nottinghamshire

DN22 7HH

England

REGISTERED IN ENGLAND NUMBER: 1321615

AUDITORS: Nexia Smith & Williamson

Statutory Auditor

Chartered Accountants

Portwall Place

Portwall Lane

Bristol

BS1 6NA

England

PRINCIPAL BANKERS: Barclays Bank plc

PO Box 3333

One Snowhill

Snowhill Queensway

Birmingham

B4 6GN

England

Deutsche Bank AG

Adolphsplatz 7

20457 Hamburg

Germany

16



Key HighlightsYEAR ENDED 31 DECEMBER 2012

Year ended Year ended

31 December 31 December

2012 2011

€’000 €’000

REVENUE 527,065 494,670

OPERATING PROFIT 115,992 73,132

NON-RECURRING ITEMS 25,158 –

PRE TAX PROFIT 121,253 76,312

NET ASSETS 382,729 295,852

NET CASH 208,223 245,728

ORDERS ON HAND 238,653 273,977

No. No.

EMPLOYEES 2,264 2,225

17 IFRS ANNUAL REPORT & ACCOUNTS 2012

Chairman’s ReviewYEAR ENDED 31 DECEMBER 2012

In the year to 31 December 2012 the Group

recorded revenues of €527.1 million (2011:

€494.7 million) and generated an operating

profit before non-recurring items of €90.8 million

(2011: €73.1 million). Of this, rental income

contributed €3.9 million (2011: €1.1 million) and

income from finance activities added €5.5 million

(2011: €3.4 million). During the period there

was a non-recurring gain of €25.2 million (2011:

€nil). This all resulted in a profit before tax of

€121.3 million (2011: €76.3 million) and a profit

after tax of €85.4 million (2011: €56.4 million).

At 31 December 2012, net cash was €208.2

million (2011: €245.7 million) and net assets €382.7 million (2011: €295.9 million).

Orders on hand at the year-end were €238.7 million (2011: €274.0 million).

In my review at the half-year, I said that I was expecting 2012 to be another record year for

the Langley Group. That has proven to be the case, with these results surpassing those of

2008 and 2011. At €527.1 million, revenues were up by 6.5% on 2011 with operating profits

excluding exceptional gains increased by 24.2% on the previous year, as our factories

reached unprecedented levels of utilisation.

For some years now the Group has been operating debt free and with substantial cash

reserves. Recently, we have invested some of our surplus cash to acquire business premises

occupied by our subsidiaries. The most significant real estate purchase in this programme

so far occurred in February 2012, when the Group purchased the million-plus square foot

headquarters and manufacturing facilities of related company, Manroland Sheetfed GmbH,

in Offenbach, Germany. As rental income from our subsidiaries and related companies is

now a material amount we have identified this within operating profit for the first time this year.

The Offenbach purchase gave rise to a fair value adjustment of €25.2 million which is shown

as a non-recurring gain in these Accounts.

18


CHAIRMAN’S REVIEW (CONTINUED) YEAR ENDED 31 DECEMBER 2012


PILLER DIVISION

Revenue: €196.6m. (2011: €189.8m)

Headquarters: Germany. Employees: 764 (2011: 748)

Piller Division was the principal driver of the 2012 result. Piller is a leading producer of advanced

power conditioning and back-up systems for data centres, together with aircraft ground power

equipment and naval military electrical systems. From its headquarters and manufacturing facilities

near Hanover, in Germany, the division recorded revenues of €196.6 million (2011: €189.8 million).

The excellent performance of Piller was brought about principally by strong demand for data

centre systems, which in turn gave rise to very high utilisation of the production facilities,

coupled with a favourable business mix. Revenues from the higher margin aftermarket have

increased by around 50% over recent years and represented approximately 30% of total

revenues in 2012. A slight shortfall in expected revenues in the US subsidiary was made

up by the UK and German companies, while Piller France, Italy and Spain performed in line

with expectations in a subdued market. Piller Australia had another very successful year,

experiencing continued strong demand, mainly from the data centre sector in Australia. Piller

Singapore, the company we established in 2009 to service the Pacific Rim, also performed

well. Notably, Piller has achieved the current levels of business without material contribution

from the BRIC countries and in 2012 management began to examine these markets, in order

to develop business in these areas for the future.

CLAUDIUS PETERS DIVISION

Revenue: €139.6m. (2011: €135.4m)

Headquarters: Germany. Employees: 540 (2011: 548)

Claudius Peters (CP), headquartered near Hamburg in Germany, has two quite separate

revenue streams. The principal activity is the design and manufacture of plant and machinery

for the cement, steel and alumina industries. The company also produces stringers for the

Airbus programme and celebrated thirty years of this activity in 2012, having supplied these

components to every Airbus ever built. The division overall experienced a satisfactory trading

year with sales of €139.6 million (2011: €135.8 million). The CP subsidiary in China saw a

slow down after several years of strong demand, as did Brazil which had performed well in

2011. In the US, the business, which had been languishing since the financial crisis, picked

up in 2012 whereas subsidiaries in Spain, Italy and the UK, not unexpectedly, reported

continued weak demand. This was compensated by Germany and the markets it serves

directly. CP France continued to trade at a historically high level on the strength of materials

handling contracts in former French dependencies, but operating margins were impacted by

a problematic contract which left the business only marginally profitable. However, all losses

on that contract are now fully provided for. CP’s aerospace division meanwhile, managed

moderate growth over the previous year and maintained margins. Orders on hand at the year

end for the CP division were €76.5 million (2011: €123.8 million).



ARO DIVISION

Revenue: €136.2m. (2011: €109.7m)

Headquarters: France. Employees: 498 (2011: 451)

ARO Division, which is based near Le Mans in central France and operates a second manufacturing

plant in Detroit in the US, is the leading producer of resistance welding equipment to the

automotive sector. The division experienced a remarkably successful year in 2012 as both

European and US automobile producers continued to invest in new production lines. Despite

the malaise in European car sales, investment in new production lines outside of Europe was

extremely buoyant and the trend, which resulted in a record year in 2011, continued and

strengthened in 2012 to reach an all-time high revenue of €136 million. This resulted in a very

healthy operating margin of 18%, largely due to extremely high utilisation of the factories in

both France and the US. Management viewed 2012, like 2011, as an exceptional year and

although the current level of activity looks set to continue until mid-2013, the business is

forecasting a slow-down in the second half. At the year end the division had orders on hand

of €38.1 million (2011: €34.0 million).

OTHER BUSINESSES

Revenue: €54.7m. (2011: €59.8m)

Located: United Kingdom & United States. Employees: 462 (2011: 478)

Other businesses had a reasonably satisfactory year overall. Bradman Lake, the packaging

machinery specialist, experienced a slower year than in 2011 but nevertheless made a

positive contribution, its operations in both the UK and the US reporting a slow down after a

record year in 2011. Clarke Chapman had a similar year to 2011 and remained acceptably

profitable as did JND. Oakdale Homes, which represents less than 1% of total group revenues,

was the only business unit to make a negative contribution, although I expect 2013 will see

it return to profit. The other businesses closed the year with order books of €19.7 million

(2011: €21.3 million).

MANROLAND SHEETFED

In the interim trading statement I reported that in February 2012, the Group had funded the

acquisition of German printing press manufacturer, Manroland Sheetfed GmbH and that after

five months the new business was trading within expectations and standing on its own feet

financially. That continued to be the case through the second half and the business which

was re-structured during the year, reached an underlying operating break-even in the last

quarter. The restructuring was completed during 2012 and all related costs were accounted

for in 2012, as were non-recurring gains arising from the acquisition.

In 2013 the Manroland Sheetfed Group, which includes some forty subsidiaries world-wide,

is now structured to break even on revenue of €350 million. At this level the production facilities

in Germany would be operating at around one third of capacity and at 80% utilisation with

20




current manning levels. Considering

demand for printing presses remains

depressed and there is currently

significant overcapacity in the market,

this is a satisfactory situation. As the

business achieved slightly over this

volume in a year which saw much

upheaval, I would expect to see

something of an improvement in 2013.

Manroland Sheetfed will report its

trading results to 31st December 2012

in March. Summary unaudited figures

are shown in the table below. This also

gives an indication of how the existing

Group and Manroland Sheetfed would have looked had they been combined at 31 December

2012. The Manroland trading result for 2012 includes substantial non-recurring costs and

gains and now that trading has been normalised, it is planned to incorporate the press

builder as a division of Langley Holdings plc in 2013.

Manroland Sheetfed Group Langley Holdings plc Total

Year ended Year ended Year ended

31 December 2012 31 December 2012 31 December 2012

€000’s €000’s €000’s

REVENUE 358,032 527,065 885,097

OPERATING PROFIT 71,400 115,992 187,392

NET FINANCE (2,548)* 5,261 2,713

(COST)/INCOME

PROFIT BEFORE TAX 68,852 121,253 190,105

NET ASSETS 80,920 382,729 463,649

CASH 46,390 208,223 254,613

EMPLOYEES 1,740 2,264 4,004

*Payable to Langley Holdings plc

Manroland Sheetfed HQ in Germany: the most significant real estate purchase to date.



OUR PEOPLE

As is customary, no review of our Group would be complete

without mention of our many employees around the world who,

through their hard work and determination, make the Group the

success that it is today. Although not yet formally part of the

group I would like to take this opportunity of welcoming to our

family of businesses, those people in over forty countries around

the world that comprise the Manroland Sheetfed group. 2012 was

a year that saw fundamental culture change in that business and

I have been impressed by the enthusiasm with which the Langley

culture has been embraced. Finally, I would like to especially

welcome to the Group, Mr Bernard Langley, my eldest son.

Bernard joined the company in October 2012 to become the fifth

generation of the family to come into the engineering business.

CONCLUSION & OUTLOOK 2013

2012 was a remarkably successful year for our Group. Our businesses, with only minor

exceptions, have performed ahead of expectation and much credit is due to our divisional

management for this achievement. At the group level much of our attention in 2012 has

been focused on re-aligning the Manroland business in readiness to become a part of the

Group. Looking to 2013, the outlook is positive for our businesses although I do not expect

to reach the 2012 heights, or for Manroland Sheetfed to make a substantial contribution; that

will come later. Capital equipment, the majority of our Group’s engagement, is a notoriously

cyclical business and although the diversity of our activities in theory means that peaks and

troughs are less pronounced, 2012 was a year which saw the majority of our businesses at

a high point and I would not expect this to be repeated. Carry-over of orders on hand at the

year-end of €238.7 million is healthy enough but compared with €274.0 million at the end of

2011, is an indication that 2013 will not be as remarkable as 2012.

Anthony J Langley

Chairman

31 January 2013

Bernard Langley joined the Group in October 2012.

22



Geographical DistributionYEAR ENDED 31 DECEMBER 2012

PILLER

37%

EU

55%

GERMANY

57%

EU

39%

ARO

26%

REST OF

WORLD

14%REST OF

WORLD

26%

FRANCE

11.5%

OTHER EU

0.5%

OTHER BUSINESSES

10%

UK

14%

UK

14%

USA

14%

REST OF WORLD

1%

CLAUDIUS PETERS

27%

USA

17%

UK

16%

USA

21%

REVENUE BY DIVISION

REVENUE BY ORIGIN

SITU OF FIXED ASSETS

REVENUE BY DESTINATION

23IFRS ANNUAL REPORT & ACCOUNTS 2012

The Directors present their report together with the audited Accounts of the Group for the year ended 31 December 2012.

PRINCIPAL ACTIVITIES

The principal activity of the Company continued to be that of a managing and parent company for a number of trading subsidiaries organised in divisions and business units engaged principally in the engineering sector. The specifi c activities of the subsidiary undertakings are as disclosed in note 16 to the Accounts.

RESULTS AND DIVIDENDS

The results of the Group for the year are set out on page 28. The profi t attributable to the shareholder for the fi nancial year was €85,426,000 (2011 - €56,387,000).

Dividends of €nil per share were paid to the ordinary shareholders during the year (2011 - €nil). No fi nal dividend was proposed at the year end.

BUSINESS REVIEW

(a) Development performance and position

The Directors are satisfied with the trading results of the Group for the year. The Chairman’s review on pages 17 to 21 contains an analysis of the development and performance of the Group during the year and its position at the end of the year.

(b) Principal risks and uncertainties

There are a number of risks and uncertainties which may affect the Group’s performance. A risk assessment process is in place and is designed to identify, manage and mitigate business risks. However it is recognised that to identify, manage and mitigate risks is not the same as to eliminate them entirely. The Group ensures that it limits its exposure to any downturn in its traditional trading sector by continuing to diversify its activities, identifying opportunities for existing product offerings into new markets and for new products for all markets. The Group has a wide range of customers which limits exposure to any material loss of revenue. The Group’s exposure to the volatility of exchange rates is mitigated through its geographical spread of operations.

(c) Going Concern

The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman’s Review on pages 17 to 21. The financial position of the Group, its cash flows and liquidity position are also described in the Chairman’s Review. In addition, note 34 to the Accounts includes the Group’s policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments, and its exposures to credit risk and liquidity risk.

The Group has considerable financial resources together with long-term contracts with a number of customers and suppliers across different geographic areas and industries. As a consequence, the Directors believe that the Group is well placed to manage its business risks successfully despite the current uncertain economic outlook.

Thus they continue to adopt the going concern basis of accounting in preparing the annual Accounts.

Directors’ ReportYEAR ENDED 31 DECEMBER 2012

24



(d) Key performance indicators (KPI’s)

The Board uses a number of tools to monitor the Group’s performance including a review of key performance indicators (KPI’s) on a regular and consistent basis across the Group. Examples of KPI’s currently used include:

Targets

• Regular monthly monitoring of sold and developed contract margins

• Minimum return on capital, being profit before tax for the year as a percentage of equity, of 25%

• Minimum return on sales, being profit before tax for the year as a percentage of sales, of 8%

2012 2011Return on Capital 32% 26%Return on Sales 23% 15%

The Board also considers the following non-financial key performance indicators:

• Staff turnover

• Orders on hand

These are reviewed monthly on information provided to the Board and details are shown on page 16.

(e) Research and development

The Group is committed to innovation and technical excellence. The Group, through its divisions, maintains a programme of research and development to ensure that it remains at the forefront of respective technologies in its key sectors.

EMPLOYMENT POLICY

The Group is committed to a policy of recruitment and promotion on the basis of aptitude and ability, without discrimination of any kind, and to training for the existing and likely needs of the business.

It is the Group’s policy to keep its employees informed on matters affecting them and actively encourage their involvement in the performance of the Group.

FINANCIAL RISK MANAGEMENT

Prudent liquidity risk management implies maintaining suffi cient cash on deposit and the availability of funding through an adequate amount of committed credit facilities. The Directors are satisfi ed that cash levels retained in the business, committed credit facilities and surety lines are more than adequate for future foreseeable requirements. Further details are set out in note 34 to the Accounts.

POLICY ON THE PAYMENT OF CREDITORS

The Group seeks to maintain good relations with all of its trading partners. In particular, it is the Group’s policy to abide by the terms of payment agreed with each of its suppliers. The average number of days’ purchases included within trade creditors for the Group at the year end was 30 days (2011 – 31 days).

DIRECTORS’ INTERESTS

The Directors of the Company in offi ce during the year and their benefi cial interests in the issued share capital of the Company were as follows:

Directors’ Report (continued)YEAR ENDED 31 DECEMBER 2012


DIRECTORS’ INTERESTS (continued) At 31 Dec 2012 At 31 Dec 2011 Ordinary shares Ordinary shares of £0.10 each of £0.10 eachA J Langley (Chairman) 1,000,000 1,000,000J J Langley (Non-Executive) - -B A Watson - -

The shareholding of Mr A J Langley represents 100% of the issued share capital of the Company.

DISCLOSURE OF INFORMATION TO AUDITORS

In the case of each person who was a Director at the time this report was approved:

• so far as that Director was aware there was no relevant available information of which the Company’s auditors were unaware;

• and that Director had taken all steps that the Director ought to have taken as a Director to make himself or herself aware of any relevant audit information and to establish that the Company’s auditors were aware of that information.

This confi rmation is given and should be interpreted in accordance with the provision of s418 of the Companies Act 2006.

STATEMENT OF DIRECTORS’ RESPONSIBILITIES

The Directors are responsible for preparing the Directors’ Report and the Accounts in accordance with applicable law and regulations.

Company law requires the Directors to prepare Accounts for each fi nancial year. Under that law the Directors have elected to prepare the Accounts in accordance with applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the Parent Company Accounts, as applied in accordance with the provisions of the Companies Act 2006. Under company law the Directors must not approve the Accounts unless they are satisfi ed that they give a true and fair view of the state of affairs of the Company and of the Group and of the profi t of the Group for that period. In preparing these Accounts, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and accounting estimates that are reasonable and prudent;

• state that the Accounts comply with IFRSs as adopted by the European Union;

• prepare the Accounts on the going concern basis unless it is inappropriate to presume that the Group will continue in business.

The Directors are responsible for keeping adequate accounting records that are suffi cient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the fi nancial position of the Company and enable them to ensure that the Accounts comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

By order of the Board

B A WATSONCompany Secretary

Langley Holdings plc

Registered in England and Wales Company number 01321615

31 January 2013

Directors’ Report (continued)YEAR ENDED 31 DECEMBER 2012

26



We have audited the Accounts of Langley Holdings plc for the year ended 31 December 2012 which comprise the Consolidated Income Statement and Statement of Comprehensive Income, the Consolidated and Company Statements of Financial Position, the Consolidated and Company Statement of Changes in Equity, the Consolidated and Company Statement of Cash Flows and the related notes 1 to 40. The fi nancial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and as regards the Parent Company Accounts, as applied in accordance with the provisions of the Companies Act 2006.

This report is made solely to the Company’s member in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s member those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s member, for our audit work, for this report, or for the opinions we have formed.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS

As explained more fully in the Statement of Directors’ Responsibilities, set out on page 25, the Directors are responsible for the preparation of the Accounts and for being satisfi ed that they give a true and fair view. Our responsibility is to audit and express an opinion on the Accounts in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.

SCOPE OF THE AUDIT OF THE ACCOUNTS

A description of the scope of an audit of Accounts is provided on the APB’s website at www.frc.org.uk/apb/scope/private.cfm

OPINION ON ACCOUNTS

In our opinion:

• the Accounts give a true and fair view of the state of the Group’s and the Parent Company’s affairs as at 31 December 2012 and of the Group’s profit for the year then ended;

• the Group Accounts have been properly prepared in accordance with IFRSs as adopted by the European Union;

• the Parent Company Accounts have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and

• the Accounts have been prepared in accordance with the requirements of the Companies Act 2006.

Independent Auditor’s Report to the MemberYEAR ENDED 31 DECEMBER 2012


OPINION ON OTHER MATTER PRESCRIBED BY THE COMPANIES ACT 2006

In our opinion the information given in the Directors’ Report for the fi nancial year for which the Accounts are prepared is consistent with the Accounts.

MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or

• the Parent Company Accounts are not in agreement with the accounting records and returns; or

• certain disclosures of Directors’ remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

Michael Neale Portwall Place

Senior Statutory Auditor, for and on behalf of Portwall Lane

Nexia Smith & Williamson Bristol BS1 6NA

Statutory Auditor

Chartered Accountants 31 January 2013

Independent Auditor’s Report to the Member (continued)YEAR ENDED 31 DECEMBER 2012

28



2012 2011

Note €’000 €’000

REVENUE 2 527,065 494,670

Cost of sales 3 (348,985) (339,991)

GROSS PROFIT 178,080 154,679

Net operating expenses 3 (62,088) (81,547)

OPERATING PROFIT 4 115,992 73,132

OPERATING PROFIT BEFORE NON-RECURRING ITEMS 90,834 73,132

NON-RECURRING ITEMS 5 25,158 -

115,992 73,132

Finance income 7 5,488 3,359

Finance costs 8 (227) (179)

PROFIT BEFORE TAXATION 121,253 76,312

Income tax expense 12 (35,827) (19,925)

PROFIT FOR THE YEAR 85,426 56,387

All of the activities of the Group are classed as continuing. Profi t for the year is attributable to the Equity holder of the Parent

Company.

Consolidated Income StatementYEAR ENDED 31 DECEMBER 2012

The notes on pages 36 to 84 form part of these accounts


2012 2011

Note €’000 €’000

Profi t for the year 85,426 56,387

Other comprehensive income:

Actuarial loss on defi ned benefi t pension schemes 31 (553) (475)

Deferred tax relating to actuarial loss 32 127 118

(426) (357)

Other deferred tax movements 32 53 118

Gain on revaluation of properties 15 2,263 -

Deferred tax on revaluation surplus (855) -

Exchange differences on translation of foreign operations 416 2,115

Other comprehensive income for the year 1,451 1,876

TOTAL COMPREHENSIVE INCOME FOR THE YEAR 86,877 58,263

Consolidated Statement of Comprehensive IncomeYEAR ENDED 31 DECEMBER 2012


30



2012 2011 Note €’000 €’000 €’000 €’000

NON-CURRENT ASSETS Intangible assets 14 2,553 2,774Property, plant and equipment 15 63,263 57,099Investment property 17 48,448 -Trade and other receivables 18 744 75Deferred income tax assets 32 8,891 8,401Income tax recoverable 19 16 499

123,915 68,848CURRENT ASSETS Inventories 20 78,038 66,670 Trade and other receivables 22 183,338 115,936 Cash and cash equivalents 23 208,223 245,728 Current income tax recoverable 24 2,747 3,261

472,346 431,595

CURRENT LIABILITIES Current portion of long term borrowings 28 20 20 Current income tax liabilities 27 10,168 8,939 Trade and other payables 25 141,531 137,835 Provisions 26 20,164 25,328

171,883 172,122

NET CURRENT ASSETS 300,463 259,473

Total assets less current liabilities 424,378 328,321

NON-CURRENT LIABILITIES Provisions 26 2,479 3,170 Long term borrowings 29 20 40 Trade and other payables 30 11,029 10,713 Retirement benefi t obligations 31 9,436 7,780 Deferred income tax liabilities 32 18,685 10,766

41,649 32,469

NET ASSETS 382,729 295,852

EQUITY Share capital 36 163 163Revaluation reserve 37 4,363 3,058Retained earnings 38 378,203 292,631

TOTAL EQUITY 382,729 295,852

Approved by the Board of Directors on 31 January 2013 and signed on its behalf by

A J LANGLEY J J LANGLEY

Director Director

Consolidated Statement of Financial PositionAS AT 31 DECEMBER 2012



Share Revaluation Retained

capital reserve earnings Total

€’000 €’000 €’000 €’000

AT 1 JANUARY 2011 163 3,097 234,329 237,589

Profi t for the year - - 56,387 56,387

Depreciation transfer - (40) 158 118

Currency exchange difference arising on retranslation - 1 2,114 2,115

Actuarial losses on defi ned benefi t schemes net of deferred tax - - (357) (357)

TOTAL COMPREHENSIVE INCOME - (39) 58,302 58,263

Dividends paid - - - -

AT 31 DECEMBER 2011 163 3,058 292,631 295,852



Currency exchange difference arising on retranslation - 3 413 416

Gain on revaluation of properties - 2,263 - 2,263

Deferred tax on revaluation surplus - (855) - (855)

Actuarial losses on defi ned benefi t schemes net of deferred tax - - (426) (426)

TOTAL COMPREHENSIVE INCOME - 1,305 85,572 86,877


AT 31 DECEMBER 2012 163 4,363 378,203 382,729

Consolidated Statement of Changes in EquityYEAR ENDED 31 DECEMBER 2012


32



Company Statement of Financial PositionAS AT 31 DECEMBER 2012

2012 2011

Note €’000 €’000 €’000 €’000

NON-CURRENT ASSETS

Property, plant and equipment 15 8,005 6,214

Investments 16 7,669 6,958

Deferred income tax assets 32 125 150

15,799 13,322

CURRENT ASSETS

Inventories 20 28 33

Trade and other receivables 22 104,496 20,951

Cash and cash equivalents 23 77,341 99,272

Current income tax recoverable 24 622 284

182,487 120,540

CURRENT LIABILITIES

Trade and other payables 25 3,369 3,205

3,369 3,205

NET CURRENT ASSETS 179,118 117,335

Total assets less current liabilities 194,917 130,657

NET ASSETS 194,917 130,657

EQUITY

Share capital 36 163 163

Revaluation reserve 37 36 46

Retained earnings 38 194,718 130,448

TOTAL EQUITY 194,917 130,657

Approved by the Board of Directors on 31 January 2013 and signed on its behalf by

A J LANGLEY J J LANGLEY

Director Director



Company Statement of Changes in EquityYEAR ENDED 31 DECEMBER 2012

Share Revaluation Retained

capital reserve earnings Total

€’000 €’000 €’000 €’000

AT 1 JANUARY 2011 163 54 101,288 101,505



Currency exchange differences arising on retranslation - 2 832 834



AT 31 DECEMBER 2011 163 46 130,448 130,657



Currency exchange differences arising on retranslation - 1 (1,151) (1,150)



AT 31 DECEMBER 2012 163 36 194,718 194,917


34



Consolidated Statement of Cash FlowsYEAR ENDED 31 DECEMBER 2012

2012 2011

Note €’000 €’000 €’000 €’000

CASH FLOWS FROM OPERATING ACTIVITIES

Cash generated from operations 40 75,035 80,321

Bank and loan interest paid (227) (120)

Interest received 5,488 3,359

Income taxes paid (26,630) (18,128)

NET CASH FROM OPERATING ACTIVITIES 53,666 65,432

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of intangible assets - (77)

Purchase of investment property (23,290) -

Purchase of property, plant and equipment (11,613) (7,443)

Proceeds from sale of property, plant and equipment 305 198

Amounts loaned to related undertaking (55,635) -

NET CASH USED IN INVESTING ACTIVITIES (90,233) (7,322)

CASH FLOWS FROM FINANCING ACTIVITIES

Repayment of amounts borrowed (20) (20)

NET CASH USED IN FINANCING ACTIVITIES (20) (20)

Net (decrease)/increase in cash and cash equivalents (36,587) 58,090

Cash and cash equivalents at 1 January 2012 245,728 186,835

Effects of exchange rate changes on cash and cash equivalents (918) 803

Cash and cash equivalents at 31 December 2012 208,223 245,728

CASH AND CASH EQUIVALENTS CONSISTS OF:

Cash in hand, at bank and short term deposits 23 208,223 245,728



Company Statement of Cash FlowsYEAR ENDED 31 DECEMBER 2012

2012 2011

Note €’000 €’000 €’000 €’000

CASH FLOWS FROM OPERATING ACTIVITIES

Cash (used in) / generated from operations 40 (11,137) 11,949

Interest paid (25) (16)

Interest received 4,897 1,871

Income taxes (paid) / received (225) 11

NET CASH (USED IN) / FROM OPERATING ACTIVITIES (6,490) 13,815

CASH FLOWS FROM INVESTING ACTIVITIES

Dividends received 61,567 26,966

Amounts loaned to group company (21,838) -

Amounts loaned to related undertaking (54,674) -

Purchase of property, plant and equipment (2,265) (320)

Proceeds from sale of property, plant and equipment 57 23

Purchase of subsidiary undertakings (536) (77)

NET CASH (USED IN) / FROM INVESTING ACTIVITIES (17,689) 26,592

Net (decrease)/increase in cash and cash equivalents (24,179) 40,407

Cash and cash equivalents at 1 January 2012 99,272 58,360

Effects of exchange rate changes on cash and cash equivalents 2,248 505

Cash and cash equivalents at 31 December 2012 77,341 99,272

CASH AND CASH EQUIVALENTS CONSISTS OF:

Cash in hand, at bank and short term deposits 23 77,341 99,272


36



Notes to the AccountsYEAR ENDED 31 DECEMBER 2012

1 ACCOUNTING POLICIES

a Basis of preparation

Langley Holdings plc is a Company incorporated in the United Kingdom.

The Accounts have been prepared in accordance with International Financial Reporting Standards (IFRS) as approved for use in the European Union applied in accordance with the provisions of the Companies Act 2006.

The Accounts have been prepared on a historical cost basis, except for the revaluation of property, plant and equipment and investment properties.

New and amended standards which became effective during the year

There were a number of Amendments to Standards dealing with disclosures of transfers of fi nancial instruments, fi rst time adoption of IFRS and accounting for deferred tax, but none of these had a material impact on the group in the current period.

New and amended standards which are not effective for the current period

IFRS 9, Financial instruments, is in issue but not yet effective and has not yet been approved by the European Union.

IFRS 10, Consolidated Financial Statements, IFRS 11, Joint Arrangements, IFRS 12, Disclosures of Interests in Other Entities, and IFRS 13, Fair Value Measurement, are in issue but are not yet effective and have been approved by the European Union.

A number of Amendments, Improvements and Interpretations have also been issued but are not yet effective including dealing with presentation and disclosure of fi nancial instruments and other comprehensive income, accounting for defi ned benefi t pension schemes and termination costs.

The directors are currently assessing the impact of these new Standards, Interpretations and Amendments on the Group’s fi nancial statements.

b Consolidation

The Consolidated Accounts incorporate the Accounts of the Company and all of its subsidiary undertakings for the year ended 31 December 2012 using the purchase method and exclude all intra-group transactions. Assets, liabilities and contingent liabilities of acquired companies are measured at fair value at the date of acquisition. Any excess or defi ciency between the cost of acquisition and fair value is treated as positive or negative goodwill as described below. Where subsidiary undertakings are acquired or disposed of during the year, the results and turnover are included in the Consolidated Income Statement from, or up to, the date control passes.

The Company has taken advantage of the exemption granted by Section 480 of the Companies Act 2006 from presenting its own Income Statement (note 13).


Notes to the Accounts (continued)YEAR ENDED 31 DECEMBER 2012

1 ACCOUNTING POLICIES (continued)

c Goodwill

When the fair value of the consideration for an acquired undertaking exceeds the fair value of its separable net assets, the difference is treated as purchased goodwill and is recognised as an asset at cost and reviewed for impairment annually. Any impairment is recognised immediately in the Consolidated Income Statement and is not reversed in subsequent years.

Where the fair value of the separable net assets exceeds the fair value of the consideration for an acquired undertaking the difference is credited to the Consolidated Income Statement in the year of acquisition.

d Impairment of intangible assets

Assets that have an indefi nite useful life are not subject to amortisation and are reviewed for impairment annually and when there are indications that the carrying value may not be recoverable. Assets that are subject to amortisation are reviewed for impairment wherever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of the fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifi able cash fl ows (cash-generating units).

The amortisation charged on those intangible assets that do not have an indefi nite useful life is calculated as follows:

Patents and licenses - 2 to 10 years straight line

e Property, plant and equipment

Property, plant and equipment is stated at cost of purchase or valuation, net of depreciation and any impairment provision.

Freehold land - not depreciated

Freehold buildings - 50 years straight line

Vehicles - 4 to 10 years straight line

Plant and machinery - 4 to 20 years straight line

Computers - 3 to 8 years straight line

Revaluations of land and buildings are made with suffi cient regularity to ensure that the carrying amount does not differ materially from that which would be determined using fair value at the year end.

38





f Investment properties

Investment properties are accounted for in accordance with IAS 40 Investment Property under the fair value model. No depreciation is provided in respect of such properties. All gains and losses are recognised through the Consolidated Income Statement.

g Financial instruments

Financial assets and fi nancial liabilities are recognised in the Consolidated Statement of Financial Position when the Group becomes a party to the contractual provisions of the instrument.

Trade receivablesTrade receivables do not carry any interest and are initially measured at their fair value as reduced by appropriate allowances for estimated irrecoverable amounts, and subsequently at their amortised cost.

BorrowingsInterest-bearing loans and overdrafts are recorded initially when the proceeds are received. Finance charges are accounted for at amortised cost using the effective interest rate method.

Trade payablesTrade payables are non-interest bearing and are initially measured at their fair value and subsequently at their amortised cost.

h Investments

Investments represent the Parent Company’s holdings in its subsidiaries and are presented as non current assets and stated at cost less any impairment in value. Any impairment is charged to the Company Income Statement.

i Inventories and work in progress

Inventories are valued at the lower of cost and net realisable value. Cost is calculated as follows:

Raw materials and consumables - cost of purchase on fi rst in, fi rst out basis.

Finished goods - cost of raw materials and labour together with attributable overheads.

Work in progress - cost of raw materials and labour together with attributable overheads.

Net realisable value is based on estimated selling price less further costs to completion and disposal.




j Construction contracts

Contract costs are recognised when incurred. When the outcome of a construction contract can be estimated reliably and it is probable that the contract will be profi table, contract revenue is recognised over the period of the contract. When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised only to the extent of contract costs incurred that it is probable will be recoverable. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

The Group uses the ‘percentage of completion method’ to determine the appropriate amount to recognise in a given period. The stage of completion is measured by reference to either the contract costs incurred up to the year end as a percentage of total estimated costs for each contract, or by reference to milestone conditions as defi ned in the contracts, as appropriate to the circumstances of the particular contract. Costs incurred in the year in connection with future activity on a contract are excluded from contract costs in determining the stage of completion, and are presented as inventories, prepayments or other assets, depending on their nature.

The Group presents as an asset the gross amount due from customers for contract work for all contracts in progress for which costs incurred plus recognised profi ts (less recognised losses) exceeds progress billings. Progress billings not yet paid by customers and retentions are included within ‘trade and other receivables’.

The Group presents as a liability the gross amount due to customers for contract work for all contracts in progress for which progress billings exceed costs incurred plus recognised profi ts (less recognised losses).

k Taxes

Income tax expense represents the sum of the income tax currently payable and deferred income tax.

Deferred income tax is provided, using the liability method, on temporary differences between the tax bases of assets and liabilities and their carrying amounts in the Accounts. Deferred income tax assets relating to the carry-forward of unused tax losses are recognised to the extent that it is probable that future taxable profi ts will be available against which the unused tax losses can be utilised.

Current and deferred income tax assets and liabilities are offset when the income taxes are levied by the same taxation authority and when there is a legally enforceable right to offset them.

40




l Foreign currencies

(a) Transactions and balancesTransactions in currencies other than euro are recorded at the rates of exchange prevailing on the dates of the transactions. At each year end, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at the year end. Non-monetary assets and liabilities carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Gains and losses arising on retranslation are included in net profi t or loss for the period, except for exchange differences arising on non-monetary assets and liabilities where the changes in fair value are recognised directly in equity.

(b) Accounts of overseas operationsOn consolidation, exchange differences arising from the translation of the net investment in foreign operations are taken to other comprehensive income. When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognised in the income statement as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

m Revenue recognition

Revenue from sale of goods is recognised when the Group has delivered the products and the customer has accepted them, and is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, VAT and other sales related taxes.

Revenue from construction contracts is recognised in accordance with the Group’s accounting policy on construction contracts.

n Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, cash at bank and short-term deposits with banks and similar fi nancial institutions with a maturity of six months or less, and bank overdrafts.




o Pension obligations

For defi ned benefi t post employment schemes, the difference between the fair value of the scheme assets (if any) and the present value of the scheme liabilities is recognised as an asset or liability in the Statement of Financial Position.

Any asset recognised is restricted, if appropriate, to the present value of any amounts the Group expects to recover by way of refunds from the plan or reductions in future contributions. Actuarial gains and losses arising in the year are taken to the Statement of Comprehensive Income. For this purpose, actuarial gains and losses comprise both the effects of changes in actuarial assumptions and experience adjustments arising because of differences between the previous actuarial assumptions and what has actually occurred.

Other movements in the net surplus or defi cit are recognised in the Income Statement, including the current service cost and any past service cost. The interest cost less the expected return on assets is also charged to the Income Statement. The amount charged to the Income Statement in respect of these schemes is included within operating costs.

The most signifi cant assumptions used in accounting for pension schemes are the long term rate of return on scheme assets, the discount rate and the mortality assumptions. The long term rate of return on scheme assets is used to calculate interest income on pension assets, which is credited to the Group’s Income Statement. The discount rate is used to determine the net present value of future liabilities. The discount rate used is the yield on high quality corporate bonds with maturity and terms that match those of the post employment obligations as closely as possible. Where there is no developed corporate bond market in a country, the rate on government bonds is used. Each year, the unwinding of the discount on those liabilities is charged to the Group’s Income Statement as the interest cost. The mortality assumption is used to project the future stream of benefi t payments, which is then discounted to arrive at a net present value of liabilities.

Valuations of liabilities are carried out using the projected unit method. The long term rate of return on pension scheme assets is determined as management’s best estimate of the long term return on the major asset classes, i.e. equity, debt, property and other, weighted by the actual allocation of assets among the categories at the measurement date. The expected rate of return is calculated using geometric averaging.

The values attributed to scheme liabilities and the long term rate of return are assessed in accordance with the advice of independent qualifi ed actuaries.

The Group’s contributions to defi ned contribution pension schemes are charged to the Income Statement in the period to which the contributions relate.

For defi ned contribution plans, contributions are recognised as an employee benefi t expense when they are due.


42




p Leased assets

All leases are treated as “operating leases” and the relevant annual rentals are charged to the Consolidated Income Statement on a straight line basis over the lease term.

q Government grants

Government grants received to fund training of employees are credited to the Consolidated Income Statement in the period received.

r Dividend policy

Dividend distribution to the Company’s Shareholder is recognised as a liability in the Group’s Accounts in the period in which the dividends are approved by the Company’s Shareholder.

s Key assumptions and signifi cant judgements

The preparation of the Accounts in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the date of the Accounts. The areas where the most judgement is required are highlighted below:

i Pensions The determination of the pension cost and defi ned benefi t obligation of the Group’s defi ned benefi t pension

schemes depends on the selection of certain assumptions which include the discount rate, infl ation rate, salary growth, mortality and expected return on scheme assets. Differences arising from actual experiences or future changes in assumptions will be refl ected in subsequent periods. See note 11 for further details.

ii Property, plant and equipment The property, plant and equipment used within the Group have estimated service lives of between 3 and 20

years, with the exception of property which has an estimated service life of 50 years, and the depreciation charge is clearly sensitive to the lives allocated to the various types of asset. Asset lives are reviewed regularly and changed where necessary to refl ect the current view on their remaining lives in light of the technological change, prospective economic utilisation and the physical condition of the assets.




s Key assumptions and signifi cant judgements (continued)

iii Revenue recognition Revenue and profi t are recognised for contracts undertaken based on estimates of the stage of completion of

the contract activity. The Group’s policies for the recognition of revenue and profi t are set out above.

iv Impairment of assets Property, plant and equipment and intangible assets are reviewed for impairment if events or changes in

circumstances indicate that the carrying amount may not be recoverable. When a review for impairment is conducted, the recoverable amount of an asset or a cash-generating unit is determined based on value-in-use calculations prepared on the basis of management’s assumptions and estimates.

v Income taxes The Group is subject to income taxes in numerous jurisdictions. Signifi cant judgement is required in determining

the provision for income taxes in each territory. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the fi nal tax outcome of these matters is different from the amounts which were initially recorded, such differences will impact the income tax and deferred tax provision in the period to which such determination is made. See notes 12 and 32 for further information.

vi Provisions Provision is made for liabilities that are uncertain in timing or amount of settlement. These include provision for

rectifi cation and warranty claims. Calculations of these provisions are based on cash fl ows relating to these costs estimated by management supported by the use of external consultants where needed and discounted at an appropriate rate where the impact of discounting is material.

t Research and development

Research and development expenditure is charged to the Income Statement in the period in which it is incurred. Development expenditure is capitalised when the criteria for recognising an asset is met. Other development expenditure is recognised in the Income Statement as incurred.


44




2 REVENUE

An analysis of the Group’s revenue between each signifi cant category is as follows:

2012 2011

€’000 €’000

Revenue from construction contracts 183,292 176,075

Sale of goods 343,773 318,595

527,065 494,670

3 ANALYSIS OF NET OPERATING EXPENSES

2012 2011

€’000 €’000

Distribution costs 27,902 26,620

Administrative expenses 68,574 61,656

Non-recurring items (note 5) (25,158) -

Other operating income (note 6) (9,230) (6,729)

Net operating expenses 62,088 81,547



4 OPERATING PROFIT

2012 2011

€’000 €’000

Operating profi t has been arrived at after charging/(crediting)

Directors’ emoluments (note 9) 2,458 1,340

Depreciation of owned assets (note 15) 7,202 6,231

Amortisation of intangibles (note 14) 178 178

Research and development costs 6,023 5,844

Loss/(profi t) on sale of property, plant and equipment 211 (51)

Fees payable to the Group’s auditor for the audit of the Group’s Accounts 101 101

Fees payable to the Group’s auditor and its associates for other services

- the auditing of Subsidiary Accounts 558 566

- other services relating to taxation compliance 79 76

- other services relating to taxation advisory 11 7

- all other services 116 124

Operating leases - land and buildings 2,366 2,351

Operating leases - other 205 258

Impairment of trade receivables 127 62

Cost of inventories recognised as an expense (included in cost of sales) 211,439 201,450

Net loss/(profi t) on foreign currency translation 272 (216)

Write down of inventories 2,389 2,585

46




5 NON-RECURRING ITEMS

The non-recurring gain of €25,158,000 in the year relates to a fair value adjustment of investment properties in CPVA

GmbH. Further details are disclosed in note 17.

6 OTHER OPERATING INCOME

2012 2011

€’000 €’000

Public grants 752 876

Rents receivable 3,001 295

Other income 3,814 4,058

Licences - 1,500

Management charge from related undertakings 1,663 -

9,230 6,729

7 FINANCE INCOME

2012 2011

€’000 €’000

Bank interest receivable 2,859 3,229

Related undertaking loan interest receivable 2,458 -

Other interest receivable 171 130

5,488 3,359

8 FINANCE COSTS

2012 2011

€’000 €’000

Other interest 227 179

227 179



9 KEY MANAGEMENT PERSONNEL COMPENSATION

2012 2011

€’000 €’000

Salaries and short-term employee benefi ts 2,534 1,405

Post-employment benefi ts 37 34

2,571 1,439

All of the above key management personnel compensation relates to Directors.

Directors’ emoluments

2012 2011

€’000 €’000

Aggregate emoluments as Directors of the Company 2,421 1,306

Value of Group pension contributions to money purchase schemes 37 34

2,458 1,340

Emoluments of the highest paid Director 1,929 916

No. No.

Number of Directors who are accruing benefi ts under money purchase pension schemes 3 3

48




10 EMPLOYEE NUMBERS AND COSTS

The average number of persons employed by the Group (including Directors) during the year was as follows:

2012 2011

No. No.

Management, offi ce and sales 983 925

Manufacturing and direct labour 1,281 1,300

2,264 2,225

The aggregate payroll costs of these persons were as follows:

2012 2011

€’000 €’000

Wages and salaries 117,510 109,887

Social security costs 24,325 22,756

Other pension costs 3,019 1,529

144,854 134,172



11 RETIREMENT BENEFIT SCHEMES

Pension schemes operated

The Group operates four pension schemes in the United Kingdom: a self administered scheme for A J Langley and

J J Langley; a scheme which provides defi ned benefi ts for certain employees of Piller (UK) Limited (“the defi ned benefi ts

scheme”); a scheme which provides defi ned benefi ts in respect of pre 1 April 1991 service and defi ned contribution

benefi ts in respect of post 1 April 1991 service (the “hybrid scheme”) for certain employees in the ‘Jenkins Newell Dunford

Group of Companies’ and ‘Clarke Chapman Group of Companies’, and a defi ned contribution scheme for certain other

employees within these ‘groups’. The Group contributed to other personal defi ned contribution schemes of various

employees.

The total cost charged to income includes €390,000 (2011 - €163,000) representing contributions payable to the defi ned

contribution schemes and the defi ned contribution section of the hybrid scheme by the Group at rates specifi ed in the

rules of the scheme.

The Group operates overseas pension schemes which are unfunded defi ned benefi ts schemes (“the unfunded schemes”)

for certain employees of Claudius Peters Projects GmbH, Claudius Peters Technologies SAS, ARO Welding Technologies

GmbH and ARO Welding Technologies SAS.

50




11 RETIREMENT BENEFIT SCHEMES (continued)

Scheme assets

The major categories of the scheme assets as a percentage of the fair value of total scheme assets are as follows:

2012 2011

Equity instruments 20.5% 20.2%

Diversifi ed growth fund 17.4% 17.2%

Debt instruments 37.8% 35.8%

Gilts 20.3% 21.0%

Other 4.0% 5.8%

100.0% 100.0%

The assets of the defi ned benefi ts scheme and hybrid scheme are generally managed on a day-to-day basis by external

specialist fund managers.

Main assumptions (rates per annum)

The main assumptions for the valuations of the schemes under IAS19 are set out below:

2012 2012 2011 2011

UK Eurozone UK Eurozone

Rate of increase in salaries 2.2-2.9% 0.5-2.4% 4.0% 0.5-1.9%

Rate of increase in pensions 2.1-2.9% 0.0-3.0% 2.2-4.0% 2.0-3.0%

Discount rate 4.2-4.3% 2.9-3.6% 4.7% 3.2-4.8%

Infl ation (a) 2.9% 0.5-2.4% 3.0% 0.5-1.9%




(a) The infl ation assumption shown for the UK is for the Retail Price Index. The assumption for the Consumer Price Index

at 31 December 2012 was 2.2 - 2.4%.

The post retirement mortality assumptions allow for future improvements in longevity. The mortality tables used

imply that a man aged 65 at the statement of fi nancial position date has a weighted average expected future lifetime

of between 20.7 and 22.6 years (2011: 22 years) and that a man aged 65 in 2036 could have a weighted average

expected future lifetime of between 22.5 and 24.5 years (2011: 24 years).

2012 2011

UK Long term rate of return expected

Defi ned benefi ts scheme 4.2% 5.0%

Hybrid scheme 3.0% 4.0%

Total expense recognised in the Income Statement

2012 2011 2010

€’000 €’000 €’000

Interest cost (544) (531) (546)

Expected return on assets 630 681 666

Past service (cost)/credit (a) (1,384) (267) 1,241

Total defi ned benefi t (expense)/credit and total expense

recognised in the income statement (1,298) (117) 1,361

(a) The credit in 2010 includes €1.86m of unfunded defi ned benefi ts released on employees leaving employment of

overseas subsidiaries.

The above amounts are included as an employee cost within net operating expenses.

52





Total amount recognised in other comprehensive income before tax

2012 2011 2010

€’000 €’000 €’000

Actuarial gains/(losses) 144 (550) (567)

Adjustment for surplus not recoverable and

unrecognised actuarial gain (697) 75 -

Gain/(loss) on currency translation on plans not

using euro as their functional currency 26 116 (52)

Total gain/(loss) recognised in other comprehensive income 527 (359) (619)

2012 2011

€’000 €’000

Actual return on scheme assets 980 842

Defi cits in the schemes

The following amounts were measured in accordance with IAS19 at 31 December:

2012 2011 2010 2009 2008

€’000 €’000 €’000 €’000 €’000

Total fair value of scheme assets 14,520 13,235 12,194 10,594 7,551

Present value of obligations – funded (12,242) (11,401) (10,152) (9,218) (7,689)

Present value of obligations – unfunded (8,310) (6,907) (6,715) (8,026) (8,977)

Present value of obligations – total (20,552) (18,308) (16,867) (17,244) (16,666)

Unrecognised net actuarial losses (728) (511) (699) (364) (201)

Surplus not recoverable (2,676) (2,196) (2,083) (1,496) (144)

Aggregate defi cit to be shown in the

statement of fi nancial position (9,436) (7,780) (7,455) (8,510) (9,460)

Defi cits are shown in the statement of fi nancial position as post retirement benefi ts. See note 31.




Movements in the present value of the defi ned benefi t obligation and in the fair value of assets

The amounts shown below include the costs, contributions, gains and losses in respect of employees who participate in

the schemes and who are employed in operations that are consolidated. Defi ned contribution plans are excluded from

the movements below.

Changes in present value of obligations 2012 2011

€’000 €’000

Present value of obligations at start of the year (18,308) (16,867)

Adjustment 17 19

Interest cost (544) (531)

Actuarial losses (402) (711)

Amount provided and utilised in unfunded schemes (1,402) (193)

Benefi ts paid 396 287

Reclassifi cation in unfunded schemes - (93)

Other movements (1) -

Exchange differences (308) (219)

Present value of obligation at end of the year (20,552) (18,308)

2012 2011

€’000 €’000

Present value of obligation in the defi ned benefi ts scheme (9,259) (8,682)

Present value of obligation in the hybrid scheme (2,983) (2,719)

Present value of obligation in the unfunded schemes (8,310) (6,907)

(20,552) (18,308)

Gains and losses on obligations

2012 2011 2010 2009 2008

€’000 €’000 €’000 €’000 €’000

Experience gains/(losses) 402 711 279 742 (1,270)

(variances between the estimate of

obligations and the subsequent outcome)

54





Changes in the fair value of scheme assets:

2012 2011

€’000 €’000

Fair value of scheme assets at the start of the year 13,235 12,194

Expected return on assets 630 681

Actuarial gains 547 161

Contributions by employers 170 151

Benefi ts paid (396) (287)

Exchange differences 334 335

Fair value of scheme assets at the end of the year 14,520 13,235

2012 2011

€’000 €’000

Fair value of assets in the defi ned benefi ts scheme 11,935 10,878

Fair value of assets in the hybrid scheme 2,585 2,357

14,520 13,235

Difference between the expected return and actual return on scheme assets:

2012 2011 2010 2009 2008

€’000 €’000 €’000 €’000 €’000

Gain/(loss) 299 358 634 833 (1,851)

The Group expects to contribute €162,000 to the defi ned benefi t pension scheme and the defi ned benefi t section of the

hybrid scheme in 2013.



12 INCOME TAX EXPENSE

(a) Charge for the year 2012 2011

€’000 €’000

Current income tax:

UK corporation tax at 24.5% (2011 – 26%) 2,337 1,485

Overseas tax 26,190 21,568

Adjustments to prior year UK tax (211) (1,288)

Adjustments to prior year overseas tax 370 (460)

Total current taxation 28,686 21,305

Deferred income tax:

Movement in overseas deferred tax 7,014 (1,158)

Movement in UK deferred tax 127 (222)

Total deferred taxation 7,141 (1,380)

Income tax expense 35,827 19,925

(b) Factors affecting tax expense 2012 2011

€’000 €’000

Profi t before taxation 121,253 76,312

Profi t before taxation multiplied by the standard rate of tax of 24.5% (2011 - 26%) 29,707 19,841

Depreciation in excess of capital allowances 292 (547)

Expenses not deductible for tax purposes 559 1,342

Income not taxable (2,048) -

Timing differences (1,565) (870)

Effect of foreign tax rates 9,975 3,994

Utilisation of losses brought forward (159) (1,833)

Deferred tax assets not recognised 22 467

Exchange adjustment (977) (721)

Adjustment to tax charge in previous period 21 (1,748)

Tax expense 35,827 19,925

56




12 INCOME TAX EXPENSE (continued)

(c) Factors that may affect future tax charges

The Group had UK tax losses of approximately €2,875,000 at 31 December 2012 (2011 - €3,601,000) available for carry

forward against future trading profi ts. In addition the Claudius Peters Group had overseas tax losses of approximately

€771,000 at 31 December 2012 (2011 - €1,492,000) available for carry forward against future trading profi ts of that

Group.

(d) Impact of future tax rate changes

On 22 June 2010 the Government announced its intention to propose to Parliament a staggered reduction in the

corporation tax rate of 1% every year culminating in a rate of 24% for the tax year 2014/15. The 2011 and 2012 Budgets

and the 2012 Autumn Statement accelerated the reduction, resulting in a rate of 24% from 1 April 2012 reducing to a rate

of 21% for the tax year 2014/15.

As at 31 December 2012, the further reduction in the tax rate for the tax year starting 2014 has not been substantively

enacted.

13 COMPANY PROFIT

The Company has taken advantage of the exemption granted by Section 408 of the Companies Act 2006 whereby

no individual Income Statement of the Company is disclosed. The Company’s profi t for the fi nancial year amounted to

€65,404,000 (2011 – €28,313,000).



14 INTANGIBLE ASSETS

GROUP Positive Patents and Total

Goodwill Licences

€’000 €’000 €’000

Cost

At 1 January 2012 2,250 2,616 4,866

Additions - - -

Exchange adjustment (43) (14) (57)

At 31 December 2012 2,207 2,602 4,809

Aggregate impairment and amortisation

At 1 January 2012 - 2,092 2,092

Amortisation charge for the year - 178 178

Exchange adjustment - (14) (14)

At 31 December 2012 - 2,256 2,256

Net book values

At 31 December 2012 2,207 346 2,553

At 31 December 2011 2,250 524 2,774

Cost

At 1 January 2011 2,122 2,623 4,745

Additions 77 - 77

Exchange adjustment 51 (7) 44

At 31 December 2011 2,250 2,616 4,866

Aggregate impairment and amortisation

At 1 January 2011 - 1,921 1,921

Amortisation charge for the year - 178 178

Exchange adjustment - (7) (7)

At 31 December 2011 - 2,092 2,092

Net book values

At 31 December 2011 2,250 524 2,774

At 31 December 2010 2,122 702 2,824

58



15 PROPERTY, PLANT AND EQUIPMENT

GROUP Freehold land Plant and

& buildings machinery Vehicles Computers Total

€’000 €’000 €’000 €’000 €’000

Cost or valuation

At 1 January 2012 68,612 74,976 9,371 16,539 169,498

Additions 4,051 4,379 1,958 1,225 11,613

Disposals (8) (2,028) (1,307) (4,433) (7,776)

Revaluation 2,263 - - - 2,263

Reclassifi cation 48 (12) - (36) -

Exchange adjustments (50) (8) 115 (27) 30

At 31 December 2012 74,916 77,307 10,137 13,268 175,628

Depreciation

At 1 January 2012 31,394 60,737 5,550 14,718 112,399

Charge for the year 1,564 3,316 1,498 824 7,202

Disposals (8) (1,929) (1,190) (4,134) (7,261)

Exchange adjustments (17) - 63 (21) 25

At 31 December 2012 32,933 62,124 5,921 11,387 112,365

Net book amount

At 31 December 2012 41,983 15,183 4,216 1,881 63,263

At 31 December 2011 37,218 14,239 3,821 1,821 57,099




15 PROPERTY, PLANT AND EQUIPMENT (continued)

GROUP Freehold land Plant and


€’000 €’000 €’000 €’000 €’000

Cost or valuation

At 1 January 2011 67,683 71,809 8,927 16,639 165,058

Additions 636 4,606 1,242 959 7,443

Disposals - (1,667) (905) (1,196) (3,768)

Exchange adjustments 293 228 107 137 765

At 31 December 2011 68,612 74,976 9,371 16,539 169,498

Depreciation

At 1 January 2011 29,963 59,435 4,901 15,103 109,402

Charge for the year 1,401 2,787 1,359 684 6,231

Disposals - (1,657) (771) (1,193) (3,621)


At 31 December 2011 31,394 60,737 5,550 14,718 112,399

Net book amount

At 31 December 2011 37,218 14,239 3,821 1,821 57,099

At 31 December 2010 37,720 12,374 4,026 1,536 55,656

60





COMPANY Freehold land Plant and


€’000 €’000 €’000 €’000 €’000

Cost or valuation

At 1 January 2012 5,591 2,174 1,618 525 9,908

Additions 1,014 351 726 174 2,265

Disposals - (583) (302) (253) (1,138)


At 31 December 2012 6,741 2,000 2,081 460 11,282

Depreciation

At 1 January 2012 154 1,906 1,159 475 3,694

Disposals - (547) (275) (253) (1,075)

Charge for the year 100 140 288 31 559


At 31 December 2012 257 1,551 1,202 267 3,277

Net book amount

At 31 December 2012 6,484 449 879 193 8,005

At 31 December 2011 5,437 268 459 50 6,214




COMPANY Freehold land Plant and


€’000 €’000 €’000 €’000 €’000

Cost or valuation

At 1 January 2011 5,425 2,093 1,507 468 9,493

Additions 29 46 202 43 320

Disposals - (19) (132) - (151)


At 31 December 2011 5,591 2,174 1,618 525 9,908

Depreciation

At 1 January 2011 64 1,735 1,013 450 3,262

Disposals - (19) (130) - (149)

Charge for the year 85 141 246 13 485


At 31 December 2011 154 1,906 1,159 475 3,694

Net book amount

At 31 December 2011 5,437 268 459 50 6,214

At 31 December 2010 5,361 358 494 18 6,231

62





The gross value of land and buildings is stated at:

Group Company

2012 2011 2012 2011

€’000 €’000 €’000 €’000

Freehold land and buildings

Existing use open market value 2012 15,224 - - -

Existing use open market value 2009 844 822 - -

Existing use open market value 2007 4,392 4,392 - -


Existing use open market value 2004 564 550 564 550


Cost 45,567 54,524 6,211 5,041

74,915 68,612 6,775 5,591

All other assets are stated at historical cost. If these assets had not been revalued they would have been included at the

following historical cost amounts:

Group Company

2012 2011 2012 2011

€’000 €’000 €’000 €’000

Freehold land and buildings

Cost 68,476 65,245 6,014 4,892

Aggregate depreciation 31,811 30,272 255 152



16 NON-CURRENT INVESTMENTS

Company

Shares in group undertakings

€’000

COST

At 1 January 2012 6,958

Additions 536

Exchange adjustment 175

At 31 December 2012 7,669

Carrying amount



Company

Shares in group undertakings

€’000

COST

At 1 January 2011 6,709

Additions 77

Exchange adjustment 172


Carrying amount



64




16 NON-CURRENT INVESTMENTS (continued)

The following companies are wholly owned unlisted trading subsidiaries at 31 December 2012:

Country of

Company Registration Principal Activity

The Clarke Chapman Group Limited England Design, manufacture, maintenance,

refurbishment and repair of cranes and other

mechanical handling equipment

Clarke Chapman Aftermarket Limited England Design, manufacture, maintenance,

refurbishment and repair of cranes and other

mechanical handling equipment

JND Technologies Limited England Design, manufacture and refurbishment of

process plant, road tankers and cementitious

grouts

Oakdale Homes Limited England House builders

Oakdale Properties Limited England Residential property

Claudius Peters Group GmbH Germany Parent company (see below)

Piller Holding GmbH (formerly Claudius Germany Parent company (see below)

Peters Aerospace GmbH)

Pressure Engineering International Limited England Manufacture of process plant and equipment,

steel structures, heat exchangers, tankage and

pressure vessels

Langley Aviation Limited England Aircraft transport

ARO Welding Technologies SAS France All of the ARO companies are involved in the

ARO Welding Technologies Inc United States design, manufacture, maintenance, repair and/or

of America distribution of resistance welding equipment and

control systems

Bradman Lake Group Limited England Dormant holding company (see below)

Retford Investments LLC United States Holder of real estate for other group companies

of America

CPVA GmbH Germany Property rental




The following companies are wholly owned unlisted trading subsidiaries of ARO Welding Technologies SAS, at 31

December 2012:

Country of


ARO Welding Technologies AB Sweden All of the companies are involved in the design,

ARO Welding Technologies SA de CV Mexico manufacture, maintenance, repair and/or

ARO Welding Technologies SAU Spain distribution of resistance welding equipment and

ARO Welding Technologies Limited England control systems

ARO Welding Technologies SA-NV Belgium

ARO Welding Technologies s.r.o Slovakia

ARO Welding Technologies GmbH Germany

ARO Welding Technologies (Wuhan) Ltd China

The following companies are wholly owned unlisted trading subsidiaries of The Clarke Chapman Group Limited at 31

December 2012:

Country of


Clarke Chapman Manufacturing Ltd England Provision of manufacturing services

Clarke Chapman Engineering Services Ltd Ireland Provision of facilities management services

Clarke Chapman Facilities Management Limited England Provision of facilities management services

Clarke Chapman Machining Limited England Provision of machining services

66





The following companies are wholly owned unlisted trading subsidiaries of Claudius Peters Group GmbH at 31

December 2012:

Country of


Claudius Peters Projects GmbH Germany All of the companies are involved in the design,

Claudius Peters Technologies SAS France manufacture, maintenance, refurbishment and

Claudius Peters (Italiana) srl Italy repair of materials processing and handling

Claudius Peters (Iberica) SA Spain equipment

Claudius Peters (China) Limited Hong Kong

Claudius Peters (UK) Limited England

Claudius Peters (Americas) Inc United States

of America

Claudius Peters (do Brasil) Ltda Brazil

Claudius Peters (Romania) srl Romania

Claudius Peters (Beijing) Machinery Services Limited China

Claudius Peters (India) Pvt. Limited India

Claudius Peters (Asia Pacifi c) Pte Ltd Singapore

The following companies are wholly owned unlisted trading subsidiaries of Piller Holding GmbH (formerly Claudius

Peters Aerospace GmbH), at 31 December 2012:

Country of


Piller Group GmbH Germany See below

Piller Dynasine GmbH Germany See below




The following companies are wholly owed unlisted trading subsidiaries of Piller Group GmbH, at 31 December 2012:

Country of


Piller Australia Pty Limited Australia All of the companies are involved in producing

Piller France SAS France electrical machinery, specialising in high capacity

Piller USA Inc United States uninterruptible power supply (UPS) systems. The

of America Group is also involved in the production of

Piller UK Limited England converters for aircraft ground power and naval

Piller Italia Srl Italy military applications.

Piller Iberica SL Spain

Piller Power Singapore Pte. Limited Singapore

Piller Germany GmbH & Co KG Germany

Piller Management GmbH Germany

The following companies are wholly owned unlisted trading subsidiaries of Bradman Lake Group Limited,

at 31 December 2012:

Country of


Bradman-Lake Limited England Both of the companies are involved in the design

and manufacture of packaging equipment.

Bradman-Lake Inc United States

of America

68




17 INVESTMENT PROPERTY

Freehold property Total

€’000 €’000

Valuation

At 1 January 2012 - -

Additions 23,290 23,290

Revaluations 25,158 25,158

Fair value at 31 December 2012 48,448 48,448

Freehold investment properties are accounted for under the fair value model. The determination of fair value is supported

by market evidence, based on a valuation by an independent valuer. The directors are of the opinion that these valuations

refl ect the fair value of the properties as at 31 December 2012.

The original historical cost of freehold investment property acquired in February 2012 was €23,290,000. The amount

recognised in the income statement in relation to the revaluation to fair value of these properties is €25,158,000. No

depreciation has been charged.

18 NON-CURRENT TRADE AND OTHER RECEIVABLES

Group

2012 2011

€’000 €’000

Other receivables 712 48

Pension scheme prepayment 32 27

744 75

19 NON-CURRENT INCOME TAX RECOVERABLE

Group

2012 2011

€’000 €’000

Income tax 16 499



20 INVENTORIES

Group Company

2012 2011 2012 2011

€’000 €’000 €’000 €’000

Raw materials 35,885 34,695 - -

Work in progress 24,274 22,664 - -

Finished goods 17,879 9,311 28 33

78,038 66,670 28 33

21 CONSTRUCTION WORK IN PROGRESS

Contracts in progress at the year end:

Group

2012 2011

€’000 €’000

Amounts due from contract customers included in trade and other receivables (note 22) 18,259 10,171

Amounts due to contract customers included in trade and other payables (note 25) (3,519) (4,583)

14,740 5,588

Contract costs incurred plus recognised profi t less recognised losses to date 141,132 113,969

Less: Progress billings (126,392) (108,381)

14,740 5,588

70




22 CURRENT TRADE AND OTHER RECEIVABLES

Group Company

2012 2011 2012 2011

€’000 €’000 €’000 €’000

Trade receivables 90,517 83,173 5,214 103

Retentions 2,339 2,091 - -

Amounts recoverable on construction contracts 18,259 10,171 - -

Amounts owed by Group undertakings - - 41,804 17,559

Amounts owed by Related undertakings 55,635 - 54,674 -

Directors’ current accounts (note 35) 160 459 160 459

Other receivables 2,799 7,233 - 2,627

VAT recoverable 5,054 3,548 177 149

Prepayments and accrued income 8,575 9,261 2,467 54

183,338 115,936 104,496 20,951

For terms and conditions relating to related party receivables, refer to note 35.



22 CURRENT TRADE AND OTHER RECEIVABLES (continued)

Trade and other receivables are disclosed net of provisions for bad and doubtful debts, an analysis of which is as follows:

Group

2012 2011

€’000 €’000

Balance at beginning of the year 2,350 2,125

Exchange differences - 7

Charge for the year 415 371

Amounts written off (82) (58)

Unused amounts reversed (134) (95)

Balance at end of the year 2,549 2,350

Trade receivables are non-interest bearing and are generally on 30 – 90 day terms.

At 31 December, the analysis of trade receivables that were past due but not impaired is as follows:

Past due but not impaired

<30 31-60 61-90 91-120 >121

days days days days days

€’000 €’000 €’000 €’000 €’000

Group

2012 15,933 2,958 1,141 1,974 278

2011 18,565 7,172 1,552 3,018 550

Company

2012 96 1 9 114 -

2011 - - - 4 94

72




23 CASH AND CASH EQUIVALENTS

Group Company

2012 2011 2012 2011

€’000 €’000 €’000 €’000

Cash in hand, at bank and short term deposits 208,223 245,728 77,341 99,272

24 CURRENT INCOME TAX RECOVERABLE

Group Company

2012 2011 2012 2011

€’000 €’000 €’000 €’000

Income tax 2,747 3,261 622 284

25 CURRENT TRADE AND OTHER PAYABLES

Group Company

2012 2011 2012 2011

€’000 €’000 €’000 €’000

Trade payables 30,287 30,682 386 616

Other payables 6,560 6,736 106 82

Other taxes and social security 5,813 5,083 466 30

Accruals and deferred income 48,717 38,029 559 685

VAT payable 4,193 1,716 - -

Amounts owed to Group undertakings - - 1,852 1,792

Payments on account 42,442 51,006 - -

Amounts due on construction contracts 3,519 4,583 - -

141,531 137,835 3,369 3,205



26 PROVISIONS

GROUP Warranty Other Total

Provision Provision

€’000 €’000 €’000

Balance at 1 January 2012 26,103 2,395 28,498

Additional provision recognised 8,538 2,718 11,256

Provision utilised during the year (8,332) (1,126) (9,458)

Provision released during year (7,373) (255) (7,628)

Foreign exchange difference (9) (16) (25)

Balance at 31 December 2012 18,927 3,716 22,643

Current 16,754 3,410 20,164

Non-current 2,173 306 2,479

Warranty Other

Provision Provision Total

€’000 €’000 €’000

Balance at 1 January 2011 17,926 1,885 19,811

Additional provision recognised 17,531 1,425 18,956

Provision utilised during the year (7,044) (625) (7,669)

Provision released during year (2,362) (275) (2,637)

Foreign exchange difference 52 (15) 37

Balance at 31 December 2011 26,103 2,395 28,498

Current 23,144 2,184 25,328

Non-current 2,959 211 3,170

The warranty provision is arrived at using estimates from historical warranty data. The other provision includes specifi c

claims, redundancy and restructuring provisions. There were no provisions in the Company.

74




27 CURRENT INCOME TAX LIABILITIES

Group

2012 2011

€’000 €’000

Income tax 10,168 8,939

28 CURRENT PORTION OF LONG TERM BORROWINGS

Group

2012 2011

€’000 €’000

Loans 20 20

29 LONG TERM BORROWINGS

Group

2012 2011

€’000 €’000

Loans 40 60

Due within one year (included in current liabilities) (20) (20)

20 40

Amounts payable:

Between one and two years 20 20

Between two and fi ve years - 20

20 40

The fair value of the loans are approximately equivalent to the book value disclosed above. Interest was charged at 0%

(2011 - 0%) on those loans during the year.

The Company has no long term borrowings.



30 NON-CURRENT TRADE AND OTHER PAYABLES

Group

2012 2011

€’000 €’000

Trade payables 434 348

Accruals and deferred income 10,595 10,365

11,029 10,713

31 RETIREMENT BENEFIT OBLIGATIONS

GROUP 2012 2011

€’000 €’000

At 1 January 2012 7,780 7,455

Utilised in year (48) (57)

Total expense charged in the Income Statement in the year 1,365 100

Transfer direct to equity on actuarial loss 553 475

Contributions paid (170) (151)

Reclassifi cation - 93

Exchange differences (44) (135)

At 31 December 2012 9,436 7,780

UK Defi ned Benefi t Schemes 1,126 873

Overseas Unfunded Defi ned Benefi t Obligations 8,310 6,907

Retirement benefi t obligation in balance sheet 9,436 7,780

76




32 DEFERRED INCOME TAX

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets

against current tax liabilities and when the deferred income taxes relate to the same fi scal authority.

Group Company

2012 2011 2012 2011

€’000 €’000 €’000 €’000

Deferred tax assets 8,891 8,401 125 150

Deferred tax liabilities (18,685) (10,766) - -

(9,794) (2,365) 125 150

The net movement on the deferred income tax account is as follows:

Group Company

2012 2011 2012 2011

€’000 €’000 €’000 €’000

At 1 January 2012 2,365 4,036 (150) 33

On revaluation in year 855 - - -

Transfer to revaluation reserve (53) (118) (5) (21)

Exchange differences (387) (55) - (6)

Income Statement charge/(credit) (note 12) 7,141 (1,380) 30 (156)

Release to equity on actuarial loss (127) (118) - -

At 31 December 2012 9,794 2,365 (125) (150)



32 DEFERRED INCOME TAX (continued)

GROUP

The movement in net deferred tax assets and liabilities during the year is as follows:

Other

Accelerated short term Retirement Fair

tax Tax temporary benefi t value

depreciation losses differences obligations gains Total

€’000 €’000 €’000 €’000 €’000 €’000

At 1 January 2011 2,184 (864) 3,138 (958) 536 4,036

Charge/(credit) to income 207 402 (1,133) (258) (598) (1,380)

Release to equity on actuarial loss - - - (118) - (118)

Transfer to revaluation reserve - - - - (118) (118)

Exchange differences (47) 9 (39) 21 1 (55)

At 31 December 2011 2,344 (453) 1,966 (1,313) (179) 2,365

Charge/(credit) to income 1,122 321 (1,530) 163 7,065 7,141

Recognised in equity on revaluation in year - - - - 855 855

Release to equity on actuarial loss - - - (127) - (127)

Transfer to revaluation reserve - - - - (53) (53)

Exchange differences (22) 1 (3) 10 (373) (387)

At 31 December 2012 3,444 (131) 433 (1,267) 7,315 9,794

78




32 DEFERRED INCOME TAX (continued)

COMPANY

Accelerated Fair

capital value

allowances gains Total

€’000 €’000 €’000

At 1 January 2011 - 33 33

Credit to income (140) (32) (172)

Credit to equity - (5) (5)

Exchange differences (5) (1) (6)

At 31 December 2011 (145) (5) (150)

Charge to income 25 5 30

Credit to equity - (5) (5)

Exchange differences - - -

At 31 December 2012 (120) (5) (125)

Unprovided deferred taxation

Group Company

2012 2011 2012 2011

€’000 €’000 €’000 €’000

Accelerated tax depreciation - 153 - -

Tax losses available 231 999 - -

Other short term timing differences 161 195 - -

Retirement benefi t obligation 98 84 - -

490 1,431 - -

No deferred tax asset has been recognised in respect of the above accelerated tax depreciation, other short term

temporary differences and tax losses because the Group is not expected to have suffi cient relevant taxable profi ts to

utilise these assets in the near future.



33 CONTINGENT LIABILITIES

Contingent liabilities exist at the balance sheet date in respect of:

Group Company

2012 2011 2012 2011

€’000 €’000 €’000 €’000

UK Group bank guarantees - - 9,471 7,781

UK Group value added tax - - 709 304

UK Bonds, guarantees and indemnities 3,881 355 624 355

Overseas bank guarantees 76,977 59,569 - -

Overseas bonds, guarantees and indemnities 26,100 28,206 - -

106,958 88,130 10,804 8,440

The Company has guaranteed the bank facilities of UK subsidiaries and is party to a group VAT registration. Throughout

the Group, contingent liabilities exist in respect of guarantees, performance bonds and indemnities issued on behalf of

Group companies by banks and insurance companies in the ordinary course of business.

In view of net cash position held with the same UK bank within the group, the Directors believe that the likelihood of the

guarantees being invoked is unlikely, therefore no provision has been recognised in these Accounts.

34 FINANCIAL INSTRUMENTS

The Group’s principal fi nancial instruments comprise borrowings, cash and short term deposits, bank loans and overdrafts

and various items such as trade payables and trade receivables that arise directly from its operations. The main purpose

of these fi nancial instruments is to fund the Group’s operations, as well as to manage its working capital, liquidity and

surplus funds.

The main risks arising from the Group’s fi nancial instruments are foreign currency risk, credit risk and interest rate risk.

Liquidity risk is not considered to be a main risk to the Group given the Group’s cash and cash equivalents balances being

considerably higher than any bank borrowings.

80




34 FINANCIAL INSTRUMENTS (continued)

Foreign currency risk

The Group is exposed to foreign currency risk on sales, purchases and borrowings that are denominated in a currency

other than the functional currencies of individual Group entities (which are principally sterling, euro and US dollars).

The Group publishes its Consolidated Accounts in euro and as a result, it is subject to foreign currency exchange

translation risk in respect of the results and underlying net assets of its operations where the euro is not the functional

currency of that operation.

Financial risk

The following table demonstrates the sensitivity to a reasonably possible change in the sterling to euro and other currencies

to euro exchange rate, with all other variables held constant, of the Group’s profi t before tax due to changes in the fair

value of monetary assets and liabilities.

Increase/decrease

Increase/decrease Effect on profi t in other Effect on profi t

in sterling rate before tax exchange rates before tax

€’000 €’000

2012 +10% (684) +10% (2,083)

-10% 836 -10% 2,545

2011 +10% (1,054) +10% (1,715)

-10% 1,288 -10% 2,096

Credit risk

The Group trades only with recognised, creditworthy third parties. It is the Group’s policy that all customers who wish to

trade on credit terms are subject to credit verifi cation procedures. In addition, receivable balances are monitored on an

ongoing basis with the result that the Group’s exposure to bad debt is not signifi cant.

With respect to credit risk arising from the other fi nancial assets of the Group, comprising of cash and cash equivalents,

the Group’s exposure to credit risk arises from default of the counterparty with a maximum exposure equal to the carrying

amounts of these instruments.



34 FINANCIAL INSTRUMENTS (continued)

Interest rate risk

The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s money on deposit.

Capital risk management

The Group defi nes capital as being share capital plus reserves and manages capital to ensure adequate resources are

retained for continued growth of the Group. Access to capital includes the retention of cash on deposit and availability of

funding through agreed capital facilities. Long term deposits are used to obtain more favourable rates of return only when

adequate cash resources are maintained on shorter term deposit for the Group’s working capital requirements.

35 RELATED PARTY TRANSACTIONS

At 31 December 2012, A J Langley owed €160,000 (2011 - €459,000) to the Company. The maximum overdrawn

balance during the year was €591,000 (2011 - €17,317,000). The full amount has been repaid since the year end.

During the year, the Company invoiced management charges and provided funding to Group companies with the following

amounts outstanding at the year end:

Amount outstanding at the year end

2012 2011

€’000 €’000

Company

The Bradman Lake group of companies 3,585 3,990

CPVA GmbH 21,838 -

Retford Investments LLC 7,496 6,038

Transactions with related parties are at market value, and are unsecured. The Company has recorded a €702,000

impairment of receivables relating to amounts owed by subsidiary undertakings during the year (2011 - €2,150,000) and

reversed €338,000 (2011 - €2,357,000) against previous impairments.

The Company and Group are controlled by A J Langley, a Director of the Company.

Transactions between subsidiaries have been eliminated on consolidation and are disclosed in the individual company

Accounts.

During the year, A J Langley, a Director of the Company acquired a new Company, Manroland Sheetfed Holdings Limited

and its subsidiaries, together the Manroland Sheetfed Group. Management charges of €1,663,000 were invoiced to this

group. This group was provided funding by Langley Holdings during the year, with €54,674,000 outstanding at the year

end. Interest of €2,468,000 was charged on this loan and paid to the Company.

82




36 SHARE CAPITAL

2012 2011

€’000 €’000

Authorised:

1,000,000 ordinary shares of £0.10 each 163 163

Allotted, issued and fully paid:

1,000,000 ordinary shares of £0.10 each 163 163

37 REVALUATION RESERVE

This reserve is used to refl ect changes in the fair value of assets, net of deferred tax, as indicated in note 1(e). It is not

available for the payment of dividends.

38 RETAINED EARNINGS

Included within the retained earnings of the Group are foreign currency translati on reserves of €(4,036,000) (2011 -

€(4,449,000)). Included within the retained earnings reserve for the Company is €1,817,000 (2011 - €666,000) of foreign

currency translation reserves.

The net currency exchange difference arising on retranslation in the year was a gain of €413,000 (2011 – €2,114,000)

for the Group and a gain of €1,151,000 (2011 – €832,000) for the Company. The foreign currency translation reserve

contains the accumulated foreign currency translation differences arising when the Accounts of the Company and Group

operations are translated from their own functional currency to the euro, being the presentation currency for the group

Accounts.



39 COMMITMENTS UNDER OPERATING LEASES

At the year end, the Group had outstanding commitments for future minimum lease payments and other costs under

non-cancellable operating leases, which fall due as follows:

2012 2011

€’000 €’000

Within one year 2,072 1,946

In two to fi ve years 2,906 2,448

After fi ve years 557 353

5,535 4,747

The lease commitments relate primarily to leases of land and buildings. The leases have various terms and renewal rights.

40 CASH GENERATED FROM OPERATIONS

GROUP 2012 2011

€’000 €’000


Revaluation of investment property (25,158) -

Depreciation 7,202 6,231

Loss / (profi t) on sale of property, plant and equipment 211 (51)

Amortisation of intangibles 178 178

Interest income (5,488) (3,359)

Interest expense 227 179

Increase in inventories (11,368) (13,603)

(Increase) / decrease in trade and other receivables (12,436) 8,048

(Decrease) / increase in trade and other payables (1,817) 5,831

Movement in retirement benefi t obligations 1,148 (167)

Foreign exchange translation adjustments 1,083 722

Cash generated from operations 75,035 80,321

84



40 CASH GENERATED FROM OPERATIONS (continued)

COMPANY 2012 2011

€’000 €’000


Depreciation 559 485

Loss / (profi t) on sale of property, plant and equipment 5 (21)

Dividend income received (61,567) (26,966)

Interest income (4,897) (1,872)

Interest expense 25 16

Decrease / (increase) in inventories 4 (33)

(Increase) / decrease in trade and other receivables (7,146) 12,359

Increase / (decrease) in trade and other payables 167 (283)

Foreign exchange translation adjustments (3,723) 9

(11,137) 11,949


Annual R

eport & A

ccounts 2012Langley H

oldings plc

langleyholdings.com

Documents

Langley Holdings plc Annual Report & Accounts 2012 · Chairman’s Review YEAR ENDED 31 DECEMBER 2012 In the year to 31 December 2012 the Group recorded revenues of €527.1 million